THIS refers to the news item ‘Rs500 banknote deadline not extended’ (Business pages, Sept 30). By demonetising Rs500 note that was issued in April 1986 both the government and the State Bank of Pakistan have taken an illegal step. The note has ceased to be legal tender from Oct 1.
The State Bank has not ensured that every person having this note in the country, as well as outside, was aware of the withdrawal of Rs500 note. Issuing a news release of a few lines for the media is not enough at all. A single column brief news story in newspapers or a sentence or two in radio and television news bulletins by no means reaches the entire population.
There has not been a single advertisement in this regard. The message does not reach everybody even in cities, not to speak of remote villages.
A woman in Hyderabad is reported to have lost all her money she had saved in demonetised notes for her daughter’s dowry.
She was just one of tens of thousands of other victims of this illogical step.
The State Bank may withdraw from circulation any currency note but it cannot fix any final date for it. All that it can do is to ask banks not to reissue any note that it wants to withdraw. In the meantime, banks must continue to accept the withdrawn notes for exchange with new ones whenever presented to them.
Look closely at any currency note of Rs5 or more. It bears a solemn commitment of the State Bank governor that he will pay to the bearer ‘on demand’ the face value of the note in rupees. It also says that the note was issued with the guarantee of the government. The printed commitment does not say that it is valid up to a certain date or that the governor may back out under certain conditions and refuse to pay the face value. It is a commitment for all times and without any conditions whatsoever.
The consequence of the demonetisation will be that the State Bank will be depriving the citizens of billions of rupees. No law gives this right to the State Bank. It may well be called a daylight robbery. Why should citizens lose their money simply because the State Bank has issued a notification for withdrawal of a note?
After Oct 1, any person still holding an old Rs500 note will have a perfect legal right to sue the State Bank. Some lawyers may also file a class action suit, compelling the State Bank not only to pay the face value of the outstanding Rs500 currency notes but also damages for causing unnecessary harassment and worry.
Before it comes to that, the State Bank must ask all branches of all banks to continue to exchange the withdrawn notes with current notes and then forward these notes to it for cancellation.
In England, anybody can take any old currency note to the Bank of England even after decades and it is exchanged with a new note, no questions asked. After all, a guarantee of the government is for all times, without any time limit.
MUHAMMAD ABD AL-HAMEED Lahore